Non-Compete Suit Violated the TCPA

More and more, Texas employers rely on non-compete agreements. More and more, those agreements are permeating down below to blue collar jobs. In Elite Auto Body v. Autocraft, No. 03-15-00064 (Tex.App. Austin 5/5/2017), Autocraft sued Elite Auto Body and three former employees of Autocraft. Autocraft claimed the three employees took trade secrets with them when they left Autocraft, including financial and personnel information. Autocraft operated a body repair shop. The three employees included a production manager, and two other employees. A fourth former employee was an Office manager for Autocraft. The former employer accused three of the former employees of using confidential information gained from Autocraft to solicit business and to persuade other Autocraft employees to join the new business.

The Defendants then counter-sued for violation of the Texas Citizens Participation Act (TCPA), also known as a SLAPP suit. Relying on the TCPA, the three defendants sought to dismiss the lawsuit saying it infringed on their right to free association or the exercise of free speech. Relying on affidavits from two of the former employees, the three defendants said the lawsuit lacked basis and was intended to chill their rights to free association. The court of appeals agreed that the Autocraft suit was based on actions which include the exercise of the right to free association. The exercise of free association is defined under the TCPA, said the court, as the right to communication between individuals to collectively promote or pursue common interests.

Autocraft claimed one defendant, David Damian, did not engage in communication under the TCPA because he breached a fiduciary duty by misappropriating confidential and proprietary information from Autocraft. But, the court noted that the communication between the three former employees includes that alleged confidential information. Since the TCPA protects communication between the three employees, they can in fact discuss confidential information. Autocraft then argued that the state legislature envisioned the TCPA would apply to public participation in government, not in the private sector. No, said the Austin court of appeals, the Texas Supreme Court has already made it clear the TCPA applies to the private sector.

Autocraft then argued that certain types of speech are not implicated by the First Amendment, such as speech regarding illegal activity. The court was more troubled by this argument. It found that the burden shifting analysis of the TCPA requires the TCPA movant to show how free speech is involved in the lawsuit by the former employer. After reviewing recent state Supreme Court decision, the Third Court of Appeals found that private speech which is restricted among the three new employees can rise to the level of free speech. Therefore, their speech relates to a matter of public concern, because the language of the TCPA itself is broad enough to include First Amendment protections.The higher court specifically noted that the TCPA does not necessarily protect only First Amendment communications. The provisions of the TCPA apply to more than free speech communications. The act applies to all communications that fit the TCPA definition, whether the communication pertains to free speech, trade secrets or not. The court found the initial question for a TCPA-based motion is whether the employees engaged in communication that fits the TCPA definition of communication and whether those individuals joined together collectively to promote or pursue common interests.

So, the court found the district court improperly failed to grant the three defendants’ motion to dismiss based on the three defendants’ “communications.” Bottom line: as long as the employees discuss so-called confidential information among themselves, it should be protected by the TCPA. See the decision here.